Shares of SpaceX have dropped below the company’s initial public offering price with analysts flagging potential for increased stock availability as lock-ups begin to expire.
SpaceX shares fell below the $135 initial public offering (IPO) price as insider share-sale restrictions started to expire, sparking concern of increased market volatility, according to Reuters. The stock bottomed at $132.15 and closed at $135.27 leaving it approximately 33% shy of its post-IPO high even though the company’s valuation still stood at a hefty $1.8 trillion.
SpaceX remains one of the Street’s most expensive companies, trading at about 49 times estimated revenues – significantly higher than many other large-cap technology firms – reported Reuters.
The first lockup, scheduled to expire after the company releases its first quarterly earnings in early August, will permit employees and certain initial investors to sell off 911.5 million shares.
Once all of the current share sale restrictions are lifted by December, roughly 40% of the company will be available on the open market, while the remaining 60%, including most of the shares owned by CEO Elon Musk, will be locked until mid-2027.
While the supply concerns around increased share availability linger, many analysts continue to maintain positive long-term outlooks based on the company’s robust growth from its Starlink satellite business and its government launch contracts.” At this level we think it is relatively safe to at least be involved from a trading perspective,” Jay Hatfield, chief executive of Infrastructure Capital Advisors, told Reuters. “We will not overweight it because they do have the lockup coming.”
A review of 50 major US IPOs since 2010 by Reuters found that companies that experienced a decline below their IPO price in the first two months often went on to significantly underperform in the long run.
